Medical marijuana entrepreneurs still interested despite challenges

The possibility of federal prosecution, large startup costs and other challenges haven’t seemed to discourage people who want to produce and sell medical marijuana legally under the parameters of a bill Gov. Pat Quinn is expected to sign into law today. The bill would take effect Jan. 1 and create a four-year pilot program in which certain patients could use up to 2.5 ounces of marijuana every two weeks.

The possibility of federal prosecution, large startup costs and other challenges haven’t seemed to discourage people who want to produce and sell medical marijuana legally under the parameters of a bill Gov. Pat Quinn is expected to sign into law today.

“There are all sorts of people interested in this industry,” said Dan Linn, a volunteer for the Illinois chapter of National Organization for the Reform of Marijuana Laws.

After a 10-year effort in the Illinois General Assembly to legalize marijuana for medicinal purposes, the governor is expected to sign House Bill 1 in Chicago.

The bill would take effect Jan. 1 and create a four-year pilot program in which certain patients, who have obtained a note from their doctor and been diagnosed with at least one of more than two dozen medical conditions, could use up to 2.5 ounces of marijuana every two weeks.

The bill allows for 60 state-regulated dispensaries where patients could buy the marijuana and 22 cultivation centers — one in each Illinois State Police district — where cannabis plants for medical use could be grown.

An estimated 1,000 jobs would be created by the pilot project throughout the new industry, and up to 15,000 Illinois patients could be served, said Linn, who previously lobbied on behalf of the bill’s passage as director of a group representing patients.

There should be more than enough people wanting licenses to grow or dispense marijuana under the legislation, he said.

‘Long overdue’

Marijuana use for medicinal reasons is not approved by the Food and Drug Administration and remains illegal under federal law. Some people involved in growing and dispensing cannabis in states where medical marijuana has been legal — including a few patients — have faced federal prosecution and gone to jail.

Entrepreneurs still see a potentially lucrative business opportunity in Illinois if the legislature allows the industry to continue after the pilot project ends and if the legal use of marijuana expands, Linn said.

These business people believe in the advertised benefits of marijuana to ease pain, increase appetite and bring other health-related benefits, he said.

Bruce H. Hunter, whose family owns Springfield’s Vinegar Hill Mall, said he is preparing to apply for one of the cultivation-center licenses somewhere in Illinois. He also would like to open a dispensary in Springfield.

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Hunter, 62, who has ownership interests in two local restaurants and whose family members operate 12 pawnshops in Illinois, said he wants to help people and make money.

He said he has had relatives with chronic health conditions decide against using marijuana in the past because it was illegal.

“We feel that the medicinal use of marijuana in this state, in this country, is long overdue,” he said. “It’s been used throughout the ages to cure many different types of disease, and it’s very cost effective.”

Even though developing an indoor growing facility would cost $350,000 to $2 million, Hunter said he is looking for partners in such a venture.

“There’s obviously a good business opportunity, we feel, for those who get in on the ground floor,” he said.

Restrictive law

Americans for Safe Access, a medical-marijuana advocacy group based in Washington, D.C., believes federal prosecutions in some parts of the country have discouraging entrepreneurs from entering the industry.

“This is basically an act of civil disobedience,” said Hunter Holliman, the group’s national field coordinator. “At any time, the feds can come in and take away your business.”

But state Rep. Lou Lang, D-Skokie, one of the Illinois legislation’s sponsors, said most federal prosecutions appear to have focused on people who were violating state law.

Illinois would become the 20th state to legalize medical cannabis and would have the most restrictive law in the country, which should discourage federal prosecutions, he said.

Lang said he has received “dozens and dozens” of calls from people wanting to operate dispensaries and cultivation centers to enter an industry that posts an estimated $3 billion in sales nationwide.

The soonest these businesses would begin serving patients would be spring 2014, but the launch more likely would be in summer or fall of next year, he said.

Lang, however, said he doesn’t care who makes money or how much they make as a result of the legislation. What’s important, he said, is patients having access to medical marijuana legally.

The fact that Illinois is President Barack Obama’s home state will have no bearing on the stance of federal law-enforcement officials, Lang said.

A 2009 memo issued by the U.S. Department of Justice suggests that federal prosecutors “not focus federal resources in your states on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.”

Betty Aldworth, deputy director of the National Cannabis Industry Association, said, “I think that federal interference in Illinois is likely to be limited, but it’s always a possibility.”

James Lewis, Springfield-based U.S. attorney for the Central District of Illinois, couldn’t be reached for comment.

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Because the legislation creates a self-supporting regulatory system in Illinois, state fees for marijuana businesses would be expensive, Linn said. License-application fees for dispensaries probably could be about $50,000, and fees for cultivators could be even higher, he said.

Added to that financial challenge are the challenges marijuana-related businesses face because of the federal government’s stance, Aldworth said. These businesses can’t get conventional bank loans or checking accounts, and they don’t qualify for the federal tax deductions that other businesses can claim, she said.

The fledgling industry wouldn’t succeed in Illinois, Linn said, if patients have to pay much more than the street value of illegal marijuana, which is between $250 and $400 an ounce. Medical marijuana isn’t covered by health insurance.

“These are sick people,” Linn said. “They’re on disability. They can’t afford to pay astronomical amounts of money for this medicine.”

It’s unknown whether many doctors will refuse to write notes for their patients wanting medical marijuana.

“Conflict between Illinois and federal law has the potential to place patients and their physicians at legal risk,” Illinois State Medical Society President Dr. Eldon Trame said in a statement.

Doctors in Springfield still may be willing to write those notes in limited circumstances, but the Sangamon County Medical Society opposes the legislation.

It’s wrong for the state to make doctors the gatekeeper for a drug that could be abused by patients, society member Dr. Casey Younkin said.

Doctors could be fooled by their patients, he said, and some physicians may write notes for patients to generate more office visits and earn more money, he said.

“There’s a group of patients who could well benefit,” said Younkin, who favors legalization of marijuana so the substance can be fully regulated. “But this opens up new avenues for abuse.”

Dean Olsen can be reached at 788-1543. Follow him at twitter.com/DeanOlsenSJR.